Multi Echelon Service Level Optimization

Inventory is essential for smooth execution of a supply chain. It is often the case that there are multiple levels of stocking locations for the same product along the fulfillment chain; i.e. customer facing regional warehouse store and sell a product, they are replenished from a national warehouse which serves as the secondary stocking location.

Businesses, intentionally or unintentionaly, keep inventory for several reasons. Safety stock is the portion of inventory that is kept for buffering agianst the unknowns of the supply chain. Supply and demand uncertainty, target service levels, and the lead time from prior stocking point in the chain dictate the safety stock requirement. It is possible to reduce the total system wide safety stock by optimizing target service levels, without sacrificing the end customer commitments,

Customer service requirements come in complex forms, some require product level order fill rate, some require aggregate stock out measures. It is a complex problem to optimize mathematically, but once it is done, it can result in 5%-10% reduction in your total inventory assets.

planLM Inventory Strategy solution provides robust analytical tools for minimizing total inventory assets by determining optimal locations and production stages that you need to keep inventory, replenishment policies and product level target service levels without sacrificing customer service commitments.

Key Benefits

• Reduce inventory assets while satisfying your customer commitments
• Improve service levels within inventory budgets and storage constraints
• Quantify cost implications of increased service levels

Key Features

planLM Inventory Strategy solution is specifically designed for rapid execution of our strategy solutions implementation methodology. It features an end-to-end approach; validation of the raw data used in the analysis, building baseline and future scenarios, optimization, detailed simulation, scenario analysis, and implementation planning. Key features are as follows:

• Unprecedented scalability; runs on 64bit architecture without any limits on the size of the supply chain.
• Comprehensive constraint modeling; inherently models storage capacities, location based inventory budgets, multi level service contracts
• Aggregate service contracts; offers flexibility in customer service commitments; product level requirements, aggregate contract level requirements, also optimizes the service levels for off-the-shelf order fill rate, or probability of stock out
• Ease of data clean-up; identifies outliers and data abnormalities, features one click baseline extraction functionality to build a current-state scenario from transactional data to compare against future scenarios
• Validation of operational feasibility; features full featured supply chain simulation to validate the operational feasibility of scenarios by providing detailed information on expected behavior of key performance indicators before physically implementing them.
• OnDemand deployment option; enables you to start your inventory strategy project right away, without acquiring any software license or hardware. Contact us for a quick start guide.